BUSINESS PANEL: Making sense of the Market Basket standoff

We asked The Patriot Ledger Economic Advisory Panel, Do you think the Market Basket protests will have any lasting effect on corporate policies and behavior toward employees and/or toward consumers?

Whatever (and whenever) the outcome, the protests by Market Basket supermarket employees and customers this summer have become a part of socioeconomic history. The organic coalition of workforce and consumers in an effort to stave off what has been portrayed as a corporatization of a benignly patriarchal organization is perceived by some as the avatar of a new American labor movement. Much has already been written about ''lessons to be learned'' and the ''new model benchmark'' for corporate success.

Richard BarryBusiness and real estate lawyer, Quincy

The Market Basket saga as played out on TV reminds me of the similarly public viewing of the 1994 road trip of the “slow white Bronco.”

On the surface it appears it is merely the employees protecting their beloved CEO Arthur T. This is no doubt true but I feel that in protecting Arthur T. they are also protecting a man committed to maintaining a corporate culture which is founded on good wages and apparently very favorable work conditions.

The loss of Arthur T. as CEO is seen by he and the employees as the end of these family-type values for the employees and their families. In our harshly bottom-line oriented culture, these wonderful values are increasing viewed as a luxury companies no longer feel they can maintain.

While I see this as a standoff between the survival of the wonderful values of the Market Basket employees and management working together and the exacting bottom-line culture, I do believe it is a one-off perfect storm unique to this family-owned business and not so much a precedent-setting step in labor relations.

Geoffrey A. GordonGordon Insurance Agency, Norwell

The labor dispute at Market Basket does cast a bright light on the difference between corporate leaders who remain close to their employees and their customers, versus those who do not. Most of American corporate culture is driven today by big data at the top, and predictable customer relationship management systems at point of purchase; and numbers do matter. But enough consumers still prefer a human touch for many buying decisions, especially when the experience is warm and positive.

In Market Basket’s case, ousted head Arthur T. Demoulas was very close to (and loved by) the employees and customers that Market Basket served. Arthur S. Demoulas, in search of higher margins, may be killing the company by misreading its greatest asset: the human factor.

Paula HarrisCo-owner, WH Cornerstone Investments, Duxbury

It's doubtful that we will see lasting effects from the Market Basket protesters, especially on private company policies. Massachusetts is an employee-at-will state, and employers can make the decisions they need to in order to more effectively run their organizations.

Where there might be lasting change is on how private companies structure their ownership and/or boards of directors. They may consider more closely how much control they are willing to give up and to whom. Also, patriarchal owners may try to put more controls into place to protect and care for their workers while they are in charge and beyond.

The Market Basket protests will have very little impact on corporate policies and behavior. Corporations are primarily motivated, and are able to survive, because they serve the needs of their shareholders by generating a profit. There may be other altruistic aspects of how the business is run, such as using clean energy, but ultimately a business will fail if it cannot generate a profit.

The Market Basket situation is very unique. The fact that this is not union-driven highlights how unusual is this situation. Because of this uniqueness, I do not see this as serving as a tipping point for a change in corporate governance for other corporations.

To maximize shareholders’ or stakeholders’ value, that is the question. One school of thought is that the responsibility of a business firm should be directed toward one end: maximizing shareholders’ wealth since shareowners provide a business enterprise with capital and expect an appropriate return on their investment. For example, by making expenditures to reduce pollution, management is spending shareowners’ money for a general social interest and becomes inefficient.

Another view is that all stakeholders (employees, customers, suppliers, creditors, host communities) have some claim on the firm and a firm has to take these claims into account in running the business. If not, customers take their business elsewhere; employees leave their jobs, etc.

The Market Basket controversy highlights the conflict between shareholder capitalism, which rewards short-termism, versus stakeholder capitalism in American business today.

Glen WhiteCEO, Mutual Bank, Whitman

Too often corporate policy is dictated by shareholder returns, and rightfully so. They are the owners of the enterprise. But this example might show the boardroom that there needs to be a balance between the owners and the employees. It seems obvious that Market Basket had created a loyal employee base, one that felt connected to the company. And that apparently bled into their customer culture.

There’s no better customer than a loyal employee and I think this particular protest may cause other corporate governances to re-think the manner in which their employees are appreciated and respected.

Joseph F. CaseyEVP/CFO, HarborOne Bank

I don’t believe the recent Market Basket protests will have a lasting impact on other companies’ policies or behavior toward employees/customers. The most successful companies already know that the key to their success over the long haul is to have an engaged and committed employee base. Companies have many other constituencies to worry about such as customers, community, suppliers, investors, regulators, etc., but employees need to be No. 1 in order for all the others to be satisfied. I don’t care if you are selling the latest fad gadget or basic necessities, if your customers have alternatives, they will quickly seek them out if you don’t have happy, engaged, enthusiastic employees!

Roy HarrisBusiness journalist, author, Hingham

Whether the chain fails, or revives – and with or without employee favorite Arthur T. Demoulas restored as CEO – the case will teach business lessons. But they won’t be widespread, because the Market Basket model of a private company, controlled by a severely split family, is so rare. Plus, so much depends on the reaction of the customer base, devoted to low pricing, and convenient store locations. Shoppers will be looking to see if the old culture remains, and what happens to former employees.

When employee favorite Steve Jobs left Apple Computer back in the mid 1980s there was destructive in-fighting and damage to the company’s value, until Jobs returned in 1996. And at Dow Jones & Co., owner of The Wall Street Journal, a split in the controlling family in 2007 allowed Rupert Murdoch and his News Corp. to take over, retaining many employees and much of its customer base.

The Market Basket case likely won’t have the wide repercussions of earlier union labor fights. The balance of power has shifted strongly toward owners who are generally much freer these days to work around employee demands.

John P. NapolitanoChairman and CEO, US Wealth Management, Braintree

I do believe that the Market Basket fiasco will help shape the behavior of employers and employees alike. Market Basket and their employees are both suffering now. I'm sure that even the embattled shareholders want to see a solution to save this business from ruin and more embarrassment. This will positively impact policy-making for employers. More employers will realize that without loyal customers and dedicated employees, there is no business.

The Market Basket phenomenon is the result of an extreme failure to understand the value of the business. This failure to understand where the value is leads to business decisions that produced the phenomenon. The fallacious assumption in this case was that the value of the business was independent of the workers. Unfortunately, the board did not understand this, but the workers did.

The Market Basket phenomenon is a warning shot across the bow for corporate boards. No longer is it prudent to rely on the simplistic numbers such as revenue, earnings and a variety of economic ratios to make critical business decisions. Considering business values requires careful evaluations of complex assets, such as worker loyalty to management.